VZCZCXRO8204
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHHI #0407/01 1001028
ZNR UUUUU ZZH
R 091028Z APR 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 7571
INFO RUEHHM/AMCONSUL HO CHI MINH 4551
RUEHBJ/AMEMBASSY BEIJING 7097
RUCNASE/ASEAN MEMBER COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 02 HANOI 000407 
 
SIPDIS 
( C O R R E C T E D  C O P Y - ADDED CAPTIONS) 
 
SENSITIVE 
SIPDIS 
 
USTR FOR BISBEE 
USDOC FOR ITA/IA SPOONER AND SU 
 
E.O. 12958: N/A 
TAGS: KTEX ECON EIND ETRD ETTC VM
SUBJECT: A/S SPOONER ADDRESSES GVN CONCERNS ON APPAREL MONITORING 
AND NON-MARKET ECONOMY STATUS 
 
REF: (A) 07 Hanoi 1731 ("Vietnam Frets Over Anti-Dumping"); 
 
(B) 07 Hanoi 772 (Commerce Addresses Apparel Concerns) 
 
HANOI 00000407  001.4 OF 002 
 
 
¶1. (SBU) Summary: Following a three-day technical exchange on trade 
remedies with the Vietnamese government (GVN), Import Administration 
Assistant Secretary David Spooner met with senior Ministry of 
Industry and Trade (MOIT) officials on April 3 to discuss the 
Department of Commerce's Import Monitoring Program (IMP) on apparel 
exports and Vietnam's designation as a non-market economy. 
Separately, MOIT officials told A/S Spooner that following Vietnam's 
"significant" economic reform and market liberalization efforts, 
they hoped that the United States would soon recognize the country 
as a market economy.  The two sides agreed to explore further the 
establishment of a working group to exchange data and informally 
discuss where Vietnam stands vis-a-vis U.S. requirements for 
recognition as a market economy.  End Summary. 
 
FRUITFUL EXCHANGE 
----------------- 
 
¶2. (SBU) At Vietnam's request, Department of Commerce (DOC) 
Assistant Secretary for Import Administration David Spooner and 
three other Commerce officials participated in a March 31 - April 2 
technical exchange with MOIT officials on U.S. anti-dumping and 
anti-subsidy laws.  During the exchange, Vietnamese officials were 
particularly interested in U.S. countervailing duty policies, which 
A/S Spooner thought could stem from their interest in ensuring that 
current Vietnamese practices, including subsidies to certain regions 
of Vietnam, are fully compliant with Vietnam's WTO obligations. 
 
¶3. (U) Throughout the three-day seminar, the MOIT officials lauded 
the transparency in U.S. trade remedy proceedings, noting that they 
hope to build similar measures into their practices, particularly 
given the increased attention on this issue by the Prime Minister 
and senior GVN officials.  Both sides agreed that the exchange 
helped increase understanding of how the two countries approach 
trade remedies.  Vietnam Competition Administration Department 
(VCAD) officials expressed their gratitude for the exchange as they 
work to formulate Vietnam's anti-dumping and countervailing duties 
policies. 
 
VIETNAM'S EFFORTS TO AVOID AN APPAREL DUMPING CASE 
--------------------------------------------- ----- 
 
¶4.  (U) In an April 3 meeting, MOIT Vice Minister Bui Xuan Khu 
outlined Vietnam's efforts to address U.S. anti-dumping concerns: 
the GVN has worked closely with the Vietnam Chamber of Commerce and 
Industry (VCCI) and Customs authorities from both countries to 
monitor the prices and contract adherence of Vietnamese exports; 
Vietnam established a mobile investigation unit, which visits 
exporters to ensure they are complying with their contract 
obligations; and, the GVN has strictly forbidden any trans-shipments 
of garments.  In addition to this, he added that the Vietnam Textile 
and Apparel Association (VITAS) (whose Chairman, Le Quoc An, 
participated in the meeting) cooperated with AmCham members to avoid 
significant increases in export volumes or decreases in export 
prices. Because of these efforts, he continued, Vietnam's export 
prices were comparable to prices from other garment exporters like 
India, particularly in the categories covered by the monitoring 
mechanism.  Vice Minister Khu hoped that the IMP analysis would 
reach a similar conclusion. 
 
¶5. (SBU) A/S Spooner responded by thanking the Vice Minister, MOIT, 
VITAS and Vietnamese exporters for their cooperation so far with the 
apparel monitoring program and for the GVN's anti-fraud efforts.  He 
assured Vietnam that the DOC would provide a courtesy notification 
of the results of the analysis between now and the end of April, 
when the report on the second six months of import data is due. 
Stressing that it is premature to offer a definitive conclusion, the 
Assistant Secretary commented that, generally, the data appears to 
show that prices of Vietnam exports are comparable to exports from 
other countries like India, Pakistan, Bangladesh and the 
Philippines.  This will be the penultimate report under the 
monitoring program, with one more analysis due before the end of 
¶2008. 
 
VIETNAM HOPING FOR A CHANGE IN ITS NME DESIGNATION 
--------------------------------------------- ----- 
 
¶6. (U) In a separate meeting, VCAD Director General Bach Van Mung 
told A/S Spooner that Vietnam has undertaken "significant" economic 
reforms and market liberalization efforts, and therefore hopes that 
the United States, the EU and others will soon recognize it as a 
market economy for purposes of trade remedy proceedings.  In a 
roundtable with officials from various MOIT departments, Mr. Mung 
sought clarification from A/S Spooner on U.S. legal statutes and 
procedures for determining whether a country has transitioned to a 
market economy. 
 
HANOI 00000407  002.4 OF 002 
 
 
 
¶7. (U) A/S Spooner agreed that much has changed in Vietnam since 
2002 when Commerce, the sole U.S. agency authorized to conduct these 
reviews, concluded that Vietnam should be treated as a non-market 
economy (NME).  He then provided a brief overview of the six 
criteria Commerce uses to evaluate an economy, highlighting that the 
2002 review identified particular weaknesses in the categories of 
currency convertibility and government control over the allocation 
of resources and the price and output decisions of enterprises. 
Under the final, "catch-all" criteria, A/S Spooner explained that 
the DOC looks at factors such as membership in multilateral 
organizations, the rule of law and corruption.  He underscored that 
DOC examines all six criteria together, and that no single one is 
determinative. In many cases, he said, the most difficult obstacle 
for countries is demonstrating that it has not only passed legal 
reforms, but is actively implementing them. 
 
¶8. (SBU) The Assistant Secretary stressed that a formal review of a 
country's economic status must occur in the context of a trade 
remedy case (a statutory requirement for reasons of transparency), 
but suggested that it would be helpful for the two sides to hold 
informal discussions to examine where Vietnam stands vis-a-vis U.S. 
legal criteria.  He pointed to the U.S.- China Structural Issues 
Working Group as an example, noting that an exchange of information 
between our governments could help to prepare an informed analysis 
by Commerce officials for when Vietnam has the opportunity to 
request a formal review as part of a trade remedy case. 
 
¶9. (U) Director General Mung welcomed the idea of an informal 
exchange via formation of a working group.  He noted that Vietnam 
has much to report, including reforms undertaken in preparation for 
its 2007 accession to the WTO, efforts to increase currency 
convertibility and Vietnam's openness to foreign direct investment. 
The two sides agreed to work closely in the near future to explore 
possible mechanisms and terms of reference for such a group.  A/S 
Spooner's Chief of Staff reported that she provided Vietnam's 
Embassy in Washington with the decision memoranda for Commerce's 
recent decisions to grant Russia and the Ukraine market economy 
status and would follow up by providing those reports to VCAD. 
 
VCAD APPRECIATES THE HELP 
------------------------- 
 
¶10. (U) VCAD Director Mung concluded by thanking Assistant Secretary 
Spooner and his Commerce colleagues, USAID and the STAR Vietnam 
program for their capacity building and training programs.  VCAD, 
with a young, inexperienced staff of less than 50, is responsible 
for enforcing Vietnam's Competition Law, overseeing consumer 
protection policies, mergers and acquisitions, and now trade 
remedies.  DG Mung said he looks forward to continuing cooperation 
with Commerce's Import Administration on the issue of trade 
remedies, as this is a new issue for Vietnam and his staff. 
 
COMMENT 
------- 
 
¶11. (SBU) The tone and atmosphere of A/S Spooner's GVN meetings was 
open, cordial and cooperative.  The Vice Minister and other MOIT 
officials were noticeably less defensive than in prior meetings 
(Reftels) when discussing the IMP, perhaps due to growing comfort 
with administration of the monitoring program.  In any case, the GVN 
seems to have shifted its focus from the monitoring program to 
removing the non-market economy designation.  It is unclear whether 
VCAD requested the technical exchange because it intends to pursue 
trade remedy cases against other countries, or whether their role 
will be solely as an internal monitor to ensure that Vietnam remains 
consistent with its international obligations, including on removal 
of subsidies. 
 
¶12. (U) A/S Spooner has cleared this cable. 
 
MICHALAK